If you drive less does your car insurance cost less?

December 9, 2010

On average it is estimated that a typical car travels 15,000km each year. However if you drive less than this how does the price of your comprehensive car insurance compare to someone who drives more?

RateCity found that some insurers do charge higher costs if you drive more. However, this depends on the car insurance provider and whether they ask you to enter or choose the average amount of kilometres you travel.

Using the driver profile of a 32-year-old single male driving a 2005 Toyota Corolla with a level-one no-claim bonus, RateCity compared quotes between seven car insurance companies (Ibuyeco, Virgin Money, Budget Direct, Cashback, Ozicare, Allianz and CGU) when driving less than 10,000km and driving over 35,000km per year.

The results showed that some companies charge more and some don’t such as Ibuyeco estimated nearly $65 more to insure a car that drives more (over 35,000km) per year.

Allianz estimated that if the same driver profile drove 1001km or more per week (maximum of up to 52,052km per year) they would pay almost $44 more each year, than if they drove between zero to 50km per week (maximum 2600 per year).

RateCity also discovered that CGU rewards drivers that travel less than 10,000km per year by offering an additional premium to choose from at a reduced price. The “nominated driver low-kilometre” price quoted was nearly $165 less than the standard nominated driver regardless of the amount of kilometres travelled.

Cut your kilometres and your premium
If you want to cut back on the cost of your car insurance premium by reducing the distance you drive, here are some ways to help you achieve this:

• Consider alternative methods of transport such as car pooling or public transport, including the train, tram or the bus. Alternatively, ride a bicycle which will keep you in shape and help the environment at the same time.
• Cut the amount of time in the car by driving to the local train or bus station or somewhere you can park the car and either walk, train or bus it in for the remainder of the trip.
• Reduce your car insurance premium and compare car insurance online to find one that costs you less no matter how often you drive.

While car insurance can cost you more if you drive a lot, it doesn’t have to if you take the time to look at the alternatives.

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